Our top tips on how your SME business can save money
Business owners often find that operating costs and overheads creep upwards and it’s not until you start to notice the pinch on cashflow that you take a step back and look at what’s costing you so much.
It’s easy to fall into a habit of putting off reviewing your spend and in doing so, you could be causing your business more harm than good. Here’s some of our tips on how you could start to save your SME business money.
Review your energy use
Energy consumption is generally one of the highest overheads, however, a necessity in order to operate your business on a daily basis. So how can you help your SME save money on its energy use?
- Switch off computers at the end of each day
- Turning the heating down by just 1 degree could save you up to 10% on your annual bill
- Only boil the water you need to make a cuppa
- Change to energy-saving lightbulbs
- Install auto lighting in meeting rooms and offices
- Renegotiate your energy tariff if possible
- Compare business energy prices online
- Consider switching energy supplier
Can you swap your business bank account
As a start up business, you would have undoubtably received a great deal on a low interest or no charges bank account. These types of accounts are perfect for new businesses, however, they generally have a set term and once this has past, the fees are just accepted.
Once your initial term is up, the charges you incur over the course of the year from processing fess and interest can add up to a substantial amount. There are business bank accounts which will help save your SME business money. Switching bank accounts to one that offers a better rate than what you’re currently on is straight forward and worth considering.
Are you using the most cost effective suppliers
Shop around. Sourcing your goods from the most cost effective supplier is an absolute must. Negotiating the best price for the goods and services you’re purchasing can make a large difference. The money you save can either be used to offer more competitive prices to your customers with an aim to increase sales or it can improve your bottom line.
Consider using multiple suppliers, it’s often easy sticking with the same one, however, this isn’t always best for your business. By using multiple suppliers, you have the ability to purchase from the cheapest one.
Check your labour costs
Outside of premises, employee wages is often the biggest overhead a company has. Review your work force, what they do, the hours that they work and what their output is and ask yourself if they are paying their wages?
Ensuring your staff levels are just right, is a balancing act and often SME’s will work to capacity. However, if your business is looking to save money, consider cutting back on positions that are not a requirement to remain operational.
Compare insurance premiums rather than auto renew
Insurance is one of those things that just auto-renews and you never have to worry about it. Did you know that you could be paying more on your insurance than you should be with an auto-renewal? Yes, more often than not, this is the case.
Whether you have public liability insurance, professional indemnity or van insurance, you could help your SME save money by comparing insurance premiums. To make sure you don’t fall into the auto-renew trap, set a calendar reminder a month ahead of your renew date and do a quick comparison online and see what you can save your business!
Review credit terms
The majority of businesses will operate with some form of credit, whether you’re providing the credit or obtaining credit from a supplier.
As the credit provider, you set out the credit terms and late payers can cause no end of problems for your business cashflow. Late payers not only causes cashflow issues, it also requires staff resource to follow up and chase payment. There are a number of options you can consider;
- Request credit references from other creditors
- Set up on Direct Debit so you have authorisation to request payment direct from their bank
- Reduce the credit limit in order to lower your risk
- Save money and reduce the number of businesses you allow to obtain a credit account
- Consider invoice finance to release some cash
Are you struggling and making late payments to your creditors? If this is happening to your business, you’re no doubt in a great deal of stress. With the creditor potentially added interest and charges for late payment, the initial figure you owed is growing by the day. Our tips in this situation are;
- Speak to your creditor(s) and explain to them your situation
- Create a plan of action to bring your account back in good standing
- Consider a merchant cash advance to assist
Are your marketing costs producing a ROI
Marketing your business has it’s highs and lows, making it extremely important to stay on top of it’s performance by monitoring the ROI.
When your budget is tight, focus on ensuring that all marketing activity is trackable. You need to understand if your marketing efforts are working and delivering the results you need. Spending money on un-trackable activity is a high risk when you’re trying to save money.
Do you have any unused assets
If you have any assets that are sat around collecting dust or used a few times a year, you probably don’t need them. Instead of letting them sit their, consider selling them and raise some cash towards easing your cashflow.
Anything from unused vehicles, computers, machinery, equipment, furniture and stock. Having a good clear out could help raise the money you need to pay that all important bill. It’s so easy to sell your unwanted assets, with the likes of eBay, Shpock and Facebook.
Can you relocate your business premise
Are you sitting in a premise that is costing you too much for your operations? Potentially your SME could save money by moving to a more suitable location.
There’s nothing worse than rattling around in a premising that is costing you more than you can afford, when you could operate just as efficiently, if not more so in a more suitable place. If you’re renting your business premise, double check your contract and see if you’re tied into a fix term or if there’s the ability to sub let.
Encouraging your business to Go Green, help build a sustainable future and save money at the same time! How about trying these tips to help your business go green;
- Cycle to work
- Join a car sharing scheme
- Don’t print it!
- Source sustainably produced goods wherever possible